The unprecedented attack on Assad's inner circle on Wednesday, along with the government's inability to crush the rebels after five days of intense clashes in the Syrian capital, point to an unravelling of his grip on power after 16 months of violence.

"It is a war going on here, literally a war," said a 25-year-old woman in the Muhajereen neighbourhood. The sounds of battle had kept her up all night and she stayed home from work because she feared random gunfire, she added.

"It reminded me of that night when the Americans shelled Baghdad nine years ago," said the woman. "I was watching it on TV, but today I'm living a very similar situation."

Even though Assad's powerful military remains mostly loyal - suggesting a total collapse may not be imminent - the rebels appeared to be making startling gains as the civil war intensified.

Besides the fighting in Damascus, about half a dozen rebels took over a Syrian border crossing near the Iraqi town of Qaim, said Iraqi army Brigadier General Qassim al-Dulaimi. There are four major border posts with Iraq.

Rebels overtook a Syrian army outpost near the Syrian-Iraq border after clashes that killed 21 Syrian soldiers, he added.

In addition, amateur video posted online showed rebels taking over the Bab al-Hawa border crossing with Turkey, where they stamped on portraits of Assad.

A diplomatic solution to ending the bloodshed seemed even more remote after Russia and China again vetoed a Western-backed UN resolution aimed at pressuring Assad's government to end the escalating conflict.